Yen Strength Continues Unfazed by Japan's Mixed Macro Data
The Japanese Yen continues to show remarkable strength in Asia's FX market, despite some mixed macro data from Japan. The USD/JPY pair fell as low as 152.88 before settling around 153.26 at the time of writing. According to MUFG Research, this volatility is largely driven by domestic factors in Japan.
The Labour Cash Earnings growth was stronger than expected at 4.7% yoy, but the final estimates of GDP showed a modest downside surprise. These numbers did not seem to change the pricing of BOJ rate hike for September, with markets fully priced for a 25bps hike.
US Treasury Secretary Scott Bessent challenged traders and the market to counter his efforts to strengthen the Yen, claiming he has more information than others on what Japanese policymakers and the BOJ will do. MUFG Research noted that sharp moves lower in USD/JPY of 10% or more are not uncommon, but whether this happens due to domestic factors or external drivers such as risk-off episodes is still a risk to watch.